Committee Reports > List of Committees > Joint > 1980 > Committee on the Secondary Legislation of the European Communities > Report No. 80 - Social Security Schemes in respect of Unemployed Workers

REPORT

Introduction

1. The Joint Committee has examined the proposal for a Council Regulation (EEC) amending, for the benefit of unemployed workers. Regulation (EEC) No. 1408/71 on the application of social security schemes to employed persons and their families moving within the Community [COM (80) 312 final].

2. To secure freedom of movement for workers the Council was obliged by Article 51 of the EEC Treaty to adopt measures in the field of social security providing for workers and their families, both the

(a)Aggregation of insurance periods and periods treated as such, and

(b)payment of benefit in all of the Community’s territory.

These matters are covered by Council Regulation (EEC) No. 1408/71 and its implementing Regulation No. 574/72 which provide:

(i)that nationals of a Member State working in another Member State will come under social security cover in the same way as nationals of the country of employment;

(ii)that periods of insurance in different Member States may be combined in determining eligibility for social security benefits, and

(iii)that social security benefits may be received anywhere within the Community.

3. At present there are certain restrictions regarding the provision at 2 (iii) in the case of benefits for the unemployed. The basic rule is that the country where the person was last employed is the one required to pay the unemployment benefit and any periods of insurance, employment or residence as appropriate completed by the unemployed person in other Member States may be used to help satisfy the contribution conditions. However, in order to receive unemployment benefit a person must make himself available for work by signing on regularly at an employment exchange in the country where the benefit is being paid, and because of this the person concerned normally cannot continue to be paid unemployment benefit if he transfers his residence to another Member State. One exception of a limited nature is provided for in Article 69 of Regulation 1408/71 under which an unemployed person who goes to another Member State to look for work may continue to receive the unemployment benefit of the country where he was last employed for a maximum period of three months.

4. Special rules apply in the case of frontier workers i.e. workers who are employed in one Member State while resident in another. Under Article 71 of Regulation 1408/71 such workers are entitled to claim unemployment benefit in the country where they reside by virtue of the contributions paid in the country where they were last employed. The cost of the unemployment benefit paid in such cases is borne entirely by the country where they reside.

5. A detailed examination of the Commission’s proposal was carried out for the Joint Committee by its Sub-Committee on Social, Environmental and Miscellaneous Matters under the Chairmanship of Senator Mary Robinson. The Joint Committee is indebted to Senator Robinson and her Sub-Committee for their work. The Sub-Committee consulted the Federated Union of Employers, the Irish Congress of Trade Unions, the Federated Workers Union of Ireland and the Departments of Health and Social Welfare.

Commission’s Proposal

6. The purpose of this proposed amendment to Regulation No. 1408/71 is to permit under certain conditions:

(a)the retention of the right to unemployment benefit where a worker transfers his place of residence to a country other than the one where he was last employed, and

(b)the export of “pre-retirement benefits” for workers transferring their residence after having become entitled to those benefits, as also the payment of those benefits to frontier workers.

The other amendments proposed are either consequential—arising from the acceptance of the two basic proposals—or technical improvements which have proved necessary in the course of implementing the Regulation.

7. This proposal leaves most of the present provisions of Regulation 1408/71 unaltered but makes special provision in Article 69(a) for workers who are unemployed and who wish to transfer their residence to a Member State with which they have close ties. It covers the following situations:

—the case of a worker who wishes to return to his country of origin or the country of origin of his spouse, the criterion being that one or other must have had not less than 15 years residence in the country of origin;

—the case of a worker who has to transfer to another country and will be unemployed, for example, a husband or wife who has to give up his/her job to move to another Member State to join his/her spouse who has been transferred there by his/her employer, the criterion being that the spouse must have been pursuing an occupation or residing in the other Member State for at least 6 months;

—the case of a young unmarried worker who has no ties with the country where he was last employed and wishes to move to another Member State where his parents are living, the criterion being that his parents must have been residing in the other Member State for at least one year.

The new provisions would permit unemployed persons in the situations outlined above to claim unemployment benefit in the country to which they moved as if they had been last employed there, and would also provide that the country of last employment would bear 85 per cent of the cost of the benefit for a maximum period of 6 months.

8. The Commission proposal also includes an amendment of Article 71 of Regulation No. 1408/71 providing for the export of pre-retirement benefits to other Member States. These benefits would include both those provided under statutory schemes and those provided for in labour agreements which grant early retirement pension or guarantee a certain income level up to a normal retirement age for elderly workers who have been made redundant or who have given up their jobs. Essentially they are measures to improve the employment situation by removing workers or elderly employed persons from the labour market. The benefits are, therefore, in this context regarded as being akin to unemployment insurance even though it is no longer necessary to remain available to the labour market, and provision for them is proposed by expanding the Chapter of Regulation No. 1408/71 relating to unemployment payment.

Implications for Ireland

9. As far as the Member States of the EEC are concerned the vast majority of Irish migrant workers emigrate to the United Kingdom. Under the existing Regulations, it is possible for a worker to go to another Member State to seek employment and to retain the right to unemployment benefit there for up to three months. However, at the end of that period if he is still unemployed he must return to the country where he was last employed in order to qualify for continuing payment of unemployment benefit. This provision is regularly availed of by Irish migrant workers coming from or going to the United Kingdom.

10. The Joint Committee was informed that it would be difficult to conjecture what the effect of the new proposal would be on the amount paid by Ireland in unemployment benefit although it is not likely to be significant. In general it can be assumed that a worker would not transfer his residence from one country to another unless he considered the prospects in the new country to be attractive. In the particular circumstances of Ireland vis-a-vis the United Kingdom considerations of a domestic nature might be an influencing factor but broadly speaking it is felt that the extent to which a provision of the nature proposed might be availed of would depend on the relative assessments made by individuals on economic prospects and the state of the employment market. Where workers decided to avail themselves of the provision, the Commission proposal that 85 per cent of the cost of benefit would be reimbursed by the country of last employment for a period of up to 6 months would reduce considerably the financial impact on the country to which the workers had transferred residence.

11. The proposal to extend the scope of the Regulations to cover pre-retirement schemes would not have significant implications for Ireland. The country of former employment would be responsible for funding such schemes. There are no statutory pre-retirement schemes in this country, and nor have any been set up in the context of industrial agreements on a general or industry-wide basis. Schemes which are known to exist result from special agreements between employers and employees in individual undertakings which have been introduced with a view to reducing the work force either because of adverse economic conditions or the introduction of new technology. The effect of the pre-retirement proposals would be to ensure that benefits under schemes which do not require the beneficiary to be available for work can be exported without restriction if the beneficiary moves to another Member State. Such information as is available about schemes in existence in this country indicates that there is no restriction on payment of benefit to persons who wish to move to another country. This is purely a co-ordinating measure. There is no question at present of requiring Member States to adopt such schemes internally, but the Joint Committee understands that the Department of Social Welfare would be required to ensure that the provisions of the proposal relating to the transfer of the benefit of such schemes are adhered to. Because of the pattern of emigration from rather than immigration to Ireland the proposal could help Irish workers to return to Ireland, but the Joint Committee was informed that it would be difficult to measure the precise impact.

12. The Joint Committee has also been informed that because of the small number of employees who are Irish nationals availing of health services in other Member States (excluding the United Kingdom) and vice-versa, non-reimbursement arrangements had been concluded between Ireland and those other Member States as the cost of administration would be disproportionate to the sums involved. This country has however a reimbursement arrangement with the United Kingdom which works substantially to our advantage. The primary implication of the proposed amendment for the Department of Health would be the extension of health services eligibility to a small number of unemployed persons coming from other Member States of the EEC. These services would, of course, be reciprocated in the case of Irish unemployed persons moving to other parts of the Community. Should the number involved increase substantially the bi-lateral non-reimbursement arrangements- with Member States other than the United Kingdom could be reviewed.

Views of the Joint Committee

13. The Joint Committee welcomes this proposal as a significant social measure. It sees it as a necessary step to help to remove an unfair distinction which exists between unemployed workers and other social security beneficiaries. Noting that there are now more than seven million unemployed in the EEC the Joint Committee feels it important to ensure that people who are not economically active, should not be inhibited by this fact alone in their freedom of movement to their Member State of origin or to Member States with which they have close ties.

Acknowledgements

14. The Joint Committee wishes to express its sincere thanks to the bodies which supplied it with memoranda or otherwise made their views known to it.

(Signed) ALEXIS FITZGERALD,

Chairman of the Joint Committee.

16th December, 1980.